Volvo CE sees growth in the face of falling markets

Volvo Construction Equipment had sales of SEK 15.4 billion (US$ 1.79 billion) for the second quarter of the year, an increase of +5% on the same period last year. The division’s operating profit was up +80% to SEK 1.35 billion (US$ 157 million), for an operating margin of 8.8%.

The company said it achieved these results in the face of weak markets. “During the first five months of 2015 most markets continued to decline, with the exception of North America,” it said in a statement. “The European market was down -8%, mainly as a consequence of a sharp drop in the Russian market (-74%). Excluding Russia, the European market grew by +3%.”

It went on to say that there was +5% growth over the same period in North America, despite a drop in demand from Canada. The fall in the Latin American market meanwhile was attributed to a -45% fall in the Brazilian equipment market.

Meanwhile in China, Volvo said it saw a fall of -45% in excavator sales and a -56% drop in wheeled loader demand. This was said to be due to the large population of under-utilised equipment, along with low activity levels in mining and construction. The company made a provision of SEK 147 million (US$ 17 million) in its accounts for the quarter against bad debts in China.

Volvo CE said its unit sales in the first six months of 2015 came to 27,400 units, compared to 36,584 in the same period last year – a -25% decline. It added that its order intake was 12,708 units, a 27% decline on the figure of 17,343 units for the first half of 2014.

The company said part of the reason for its improvement in revenues and profitability was a shift in exchange rates favouring the Swedish Krone (SEK).